Functionaries are the specialized, tamper-resistant devices that operate and secure the Liquid Network, currently 15, run by Liquid Federation members and distributed around the world. Instead of proof-of-work, they take turns proposing blocks in a round-robin, and a block is finalized once 11 of the 15 sign it. Each pairs a functionary server with a Hardware Security Module that guards one of the 15 federation multisig keys. The Dynamic Federations upgrade allows expansion beyond 15.

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Liquid has two membership tiers: Liquid users (anyone, using free open-source software to send and receive) and Liquid Federation members (incorporated companies that operate and govern the network). By technical role there are light wallets (rely on a trusted node), Liquid nodes (trustlessly validate, peg in, and issue assets), bridge nodes (Federation-run, shielding functionaries from denial-of-service attacks), and functionaries (the 15 HSM-backed devices that sign blocks and secure the peg).

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Yes. Every Liquid asset, including LBTC and USDT, uses the same address type, so any Liquid asset can be sent to and from any Liquid address. The Blockstream app automatically recognizes received assets, showing names and logos for those in the Liquid Asset Registry and asset IDs for unknown ones. As with Bitcoin, it's best practice to avoid reusing addresses.

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Liquid blocks share Bitcoin's 4 MB weight limit but are produced every minute (60 per hour versus Bitcoin's roughly 6). Confidential Transactions make Liquid transactions larger (1,625 to 2,500 vbytes versus 250 to 450), so each block holds fewer (400 to 600 versus 2,000 to 4,000), but the faster cadence gives higher overall throughput, roughly 24,000 to 36,000 transactions per hour (7 to 10 per second), with two-block finality.

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Liquid fees are always paid in LBTC, so you need some LBTC to send any asset (including USDT); recipients don't. The floor is 0.1 satoshi/vbyte, one-tenth of Bitcoin's minimum, usually enough for next-block inclusion, and functionaries prioritize higher-fee transactions during demand. Fees exist to prevent denial-of-service spam; Blockstream collects them to cover mainchain peg-out costs and manage the federation's mainchain wallet. The app offers slow, medium, and fast presets or a custom amount.

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By default, every Liquid transaction uses Confidential Transactions, a cryptographic protocol that hides both the asset type and the amount from outside observers, while still letting other users verify balances and total supply. Transaction IDs, addresses, and fees stay visible. Only the participants and anyone holding the blinding key can see the hidden details, which you can share voluntarily with an auditor or regulator; not even Liquid members or functionaries can break the encryption.

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The Liquid Federation secures pegged bitcoin in an 11-of-15 multisig, with each of the 15 functionaries holding one key inside its HSM, so draining it would require at least five functionaries to fail at once. On peg-out, functionaries verify the destination is whitelisted and the matching LBTC was burned before signing. A timelock-based Emergency Withdrawal Procedure lets Blockstream's cold-storage backup keys recover funds if the network goes inactive for 28 days; timelocks refresh on peg-ins, peg-outs, and automatically every 7 days.

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Liquid assets are tokens issued on the Liquid Network. They come in two kinds: LBTC, which is verifiably backed 1:1 by bitcoin on the mainchain and also pays network fees; and issued assets, custom tokens anyone can create (stablecoins like USDT, security tokens, collectibles, vouchers) where the issuer is responsible for backing and redemption. All share one-minute blocks with two-block finality, Confidential Transactions, and trust-minimized swaps.

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A peg-out moves bitcoin from Liquid back to the mainchain by burning LBTC on the sidechain to release an equal amount of BTC from the federation's multisig. Only Liquid Federation members can perform peg-outs: after two Liquid confirmations, functionaries release BTC to the member's whitelisted address, batched at variable 20 to 60 minute intervals. Regular users convert LBTC to BTC through a Federation member or by swapping with other users.

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A peg-in moves bitcoin onto Liquid by sending BTC to a Liquid Federation address; after 102 Bitcoin confirmations you can claim the equal amount of LBTC on the sidechain, the high count guarding against chain reorganizations. Peg-ins are the only way new LBTC is created, keeping its supply always backed 1:1. Anyone can peg in, though most people use exchanges instead, and since only Federation members can peg out, make sure you have a way to convert LBTC back to BTC before starting.

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LBTC is a Liquid asset whose supply is verifiably backed 1:1 by bitcoin the Liquid Federation holds on the mainchain, and anyone running a Liquid node can check the backing. It's created by a peg-in (send BTC to the federation multisig, receive LBTC) and redeemed by a peg-out (a member burns LBTC, functionaries release BTC to a whitelisted address). The backing bitcoin sits in an 11-of-15 multisig, with each key on an HSM inside geographically distributed functionaries.

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The Liquid Federation is more than 80 Bitcoin-aligned businesses (exchanges, infrastructure companies, and asset managers) that operate and govern the Liquid Network. A subset of 15 members run the functionaries that sign blocks and secure the two-way peg; members also vote for the Technology, Membership, and Oversight boards, run bridge nodes, and (on the peg-out authorization list) handle peg-outs for users. Dynamic Federations lets the network add functionaries beyond 15.

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The Liquid Network is a Bitcoin layer-2 sidechain for fast, confidential settlement and asset issuance, linked to Bitcoin by a verifiable 1:1 peg. It offers one-minute blocks with two-block finality, Confidential Transactions that hide amounts and asset types, and open asset issuance for stablecoins, security tokens, and collectibles. Liquid depends on Bitcoin for security and is run by the Liquid Federation's 15 functionaries signing blocks in rotation rather than by proof-of-work mining.

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A Liquid transaction is final after two confirmations, about two minutes at one-minute block times. Liquid can have shallow one-block reorganizations from propagation delays, so one confirmation isn't fully safe, but a transaction with two confirmations can't be reversed. Because blocks are functionary-signed rather than proof-of-work, security doesn't keep rising with more confirmations the way Bitcoin's six-confirmation model does; two is enough.

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